Rent to Own Option as a Way of Becoming a Home Owner
There are different ways that you could own a house but a rent to own contract is one that most people are yet to know about. A rent to own contract is one with an option to purchase the home one is renting on a predetermined price when the rental period expires. Part of the rent that you pay is taken as equity and building your credit. In exchange for this option the home buyer is allowed to buy the house on an agreed amount regardless if the value of real estate appreciates or not. Having the option does not mean that the potential buyer is forced to buy the piece of property .
The part of the funds are not taken as security deposits, they just serve to lock the negotiated value at the current moment regardless of the real estate value will go up. The instructions however will be that the party renting to buy has to meet the rent on time and treat the property as a rental during that period. If you want to make some improvements to the house you will have to seek permission from the agency. In the rent to own you will be paying more rent than in normal rental properties but it’s because there is an amount going towards the final purchase of the house .
Depending on how you look at it is similar to committing yourself to a forced savings plan only that this one is towards making a down payment at the end of the contract. The agreement, between the two parties might also require the renter to effect some minor repairs only after the renting period has expired. For major issues such as a new roof and some structural aspects, those remain the responsibility of the home owner until a new home buyer opts to exercise the option. Rent to own properties benefit you in another way if you are taking the contract, if you have been in some bad financial debts before you are able to build your credit ratings.
As the person taking the contract make sure that the property in question has been inspected by a qualified property inspector and approved. The good thing about dealing with a qualified professional is that among the list of professionals they will set you up with is a property inspector. Some companies are good enough to allow you to check out the neighborhood where the property is before you can commit yourself to seeing the contract through. In some environments it is difficult to qualify for mortgages on homes, rent to own becomes a good option in such cases.